Minimum Wage Nonsense

Today’s Star Ledger includes an article about New Jersey’s poor. The article claims that 1 in 5 New Jersey families cannot afford the basic necessities. The policy solution offered by the Poverty Research Institute is to raise the minimum wage to $8.50 an hour and index it to inflation.

A few points:

1) Why is there even a minimum wage? What business of is it is the government’s to tell employers what they must pay people? if you have a willing seller and a willing buyer, then there is no problem. If wages are too low, people will not take the jobs and employers will be forced to raise their prices.

2) Why is the Poverty Research Institute being so stonehearted? If $7.15 per hour isn’t enough to live on then how is $8.50? Why shouldn’t the minimum wage be 50 bucks an hour? Surely that would close this supposed income disparity.

3) When prices are raised, the demand for that product drops. Haven’t these poverty advocates taken a basic economics course? Make it more expensive to hire minimum wage workers and firms will not hire as many.

4) The minimum wage is nothing more than a transfer program. It takes from one group to give to another. Take McDonald’s for example. To pay for the minimum wage increase, they raise prices on quarter pounders. Since the demand to fast food is inversely releated to income, that raise is being paid for out of the pocket of other low-income individuals.

But because this minimum wage policy is being offered by some do-gooder, liberal interest group it will be taken seriously by the media and most surely become a key campaign talking point for the Democratic candidates in our state.